what are memecoins
What Is a Meme Coin (MemeCoin)?
A meme coin is a type of cryptocurrency inspired by internet memes, viral trends, or community culture.
The value of meme coins is largely driven by hype, community sentiment, and compelling narratives, rather than sophisticated technology or utility. Popular examples include DOGE, SHIB, PEPE, and BONK. Many refer to meme coins as “the stocks of internet culture” because their prices often fluctuate with social media discussions and celebrity-driven events. Meme coins can serve as a “community ticket” or simply be speculative, high-risk assets.
Why Should You Understand Meme Coins?
Meme coins can have a significant impact on trading volumes and overall market sentiment during bullish phases.
For traders, meme coins offer opportunities for short-term gains due to their high volatility but also carry substantial risk and inconsistent project quality. Understanding how meme coins function helps distinguish between unsustainable price surges and tokens with genuine liquidity or transparency. For newcomers, familiarizing yourself with meme coins helps avoid common pitfalls like excessive transaction fees, lock-up schemes, and misleading promotions.
How Do Meme Coins Work?
Meme coins typically originate from a viral meme or mascot and are minted and launched by a team or community.
Issuance and Supply: Some meme coins have fixed maximum supplies, while others employ burn or inflationary mechanisms. Burning refers to permanently removing tokens from circulation to create scarcity; inflation involves ongoing token minting.
Liquidity and Trading: Many meme coins establish liquidity pools on decentralized exchanges (DEXs), which function as automated swap mechanisms—two assets are deposited into a pool, enabling users to trade between them at algorithmically determined rates. Larger pools mean more stable prices and easier transactions. Slippage occurs when shallow liquidity causes significant price deviations during trades.
Taxation and Mechanisms: Certain meme coins impose buy or sell taxes on-chain, which may be used for marketing, buybacks, or rewarding token holders. Excessive taxes can reduce trading volume and liquidity provider engagement. Some projects use airdrops as incentives—airdrops distribute tokens to users based on holdings or task completion.
Narratives and Social Media: Price action is often narrative-driven, influenced by celebrity endorsements, viral events, or meme propagation. Think of “community consensus” as fans supporting their idol—the more people participate, the stronger the sustained interest and liquidity.
Typical Behaviors of Meme Coins in the Crypto Space
Meme coins are known for high volatility, strong social media momentum, and rapid listings on exchanges.
On Exchanges: On platforms like Gate, major meme coins such as DOGE, SHIB, PEPE, and BONK are consistently among the most actively traded pairs. During hype cycles, both trading volume and search interest spike. New meme coins often get listed soon after going viral on social media—but listing does not guarantee reliability; always check liquidity depth and risk warnings.
In DeFi and Market Making: Many meme coins set up liquidity pools on blockchains like Ethereum and Solana, with communities providing capital in exchange for transaction fee rewards. During periods of high interest, market making yields can be substantial; when hype fades, liquidity shrinks and slippage and price swings intensify.
In Community & Marketing: Meme coins rely heavily on viral memes, challenges, and leaderboard campaigns to boost visibility. Prices often surge or drop sharply in response to event-driven hype, with both frequency and amplitude exceeding most mainstream tokens.
How to Buy Meme Coins?
Choose reputable platforms and establish robust risk controls before making any purchases.
Step 1: Register on Gate and set up security features—enabling two-factor authentication is recommended.
Step 2: Fund your account. Purchase USDT in the fiat section or transfer crypto from another wallet to your Gate account.
Step 3: Search for your target meme coin (e.g., DOGE, PEPE, BONK), then review its “Profile”, “Risk Warnings”, “Order Book Depth”, and recent price performance on the trading page.
Step 4: Select your order type. Limit orders suit patient buyers; market orders are for instant execution. Pay attention to minimum order amounts and transaction fees.
Step 5: Set up risk management strategies. Use staggered entries, set stop-loss and take-profit levels; avoid going all-in during parabolic surges.
Step 6: If using derivatives, always opt for low leverage and set liquidation prices—meme coin volatility amplifies leverage risks.
How to Mitigate Meme Coin Risks?
Focus on assessing liquidity and tokenomics while controlling position size and timing.
Check Liquidity & Depth: Use the Gate trading page to observe the order book and trading volume—greater depth means less risk of extreme slippage. For newly listed tokens with thin order books on day one, avoid large market orders.
Review Supply & Taxation: Pay attention to total supply, vesting schedules, team allocations, and unlock plans. Tokens with high on-chain taxes have higher short-term trading costs—proceed with caution.
Identify Blacklists & Traps: New meme coins may contain malicious smart contract code that restricts selling or blacklists users. Stick to reputable exchanges; avoid buying from unknown contracts blindly.
Control Position Size & Timing: Treat meme coins as high-risk allocations—small positions allow for safer experimentation. Use stop-loss orders to manage downside and take profits gradually during rallies; avoid emotional decision-making.
Monitor Social Media Trends: Hype cycles end quickly—watch for shifts in attention or fake news (such as doctored celebrity screenshots).
Noteworthy Meme Coin Trends & Data
Over the past year, the meme coin sector has remained highly active with frequent price swings.
Full Year 2025: Leading meme coins like DOGE, SHIB, PEPE, and BONK repeatedly appeared atop exchange leaderboards as market sentiment surged and cooled with each narrative wave. According to public market data, these assets experienced daily price swings of 25–40% multiple times in H2 2025, with occasional intraday volatility exceeding 80%.
Second Half of 2025: The pace of new meme coin launches within the Solana ecosystem surged alongside increased social media buzz. Liquidity became highly concentrated during peak periods—first-day trading volumes often ranged from tens of millions to several hundred million USD before rapidly cooling as topics faded from the spotlight.
Key Monitoring Metrics:
- Trading Volume & Depth: Watch exchange leaderboards and order book depth for sustained improvement.
- Social Media Hype: Weekly trending posts and search volumes typically jump 5–10x during hype cycles; price peaks often coincide with peak attention.
- Derivatives Activity: Periods of high volatility see increased open interest and liquidations in contracts markets—risk controls should be strengthened accordingly.
In summary, meme coins maintained high volatility and narrative-driven momentum throughout 2025. As we move into the new year, prioritizing position sizing and liquidity remains essential.
Related Terms
- Community-Driven: Meme coins derive value primarily from community participation and promotion rather than technological innovation.
- Viral Spread: Meme coins often achieve rapid popularity through social media sharing and online culture.
- High Volatility: Meme coin prices are highly unstable with large price swings—both risk and potential reward are elevated.
- Decentralized Trading: Meme coins are commonly traded on DEXs (decentralized exchanges), which operate without centralized intermediaries.
- Liquidity Pool: Users provide tokens to liquidity pools in exchange for a share of transaction fees—this underpins meme coin trading activity.
FAQ
What’s the difference between meme coins and mainstream cryptocurrencies?
Meme coins are launched based on internet culture, memes, or celebrity figures, while mainstream cryptocurrencies (such as Bitcoin or Ethereum) are built around technological innovation and real-world use cases. Meme coin prices are largely community-driven with extreme volatility—their value depends mostly on social momentum; mainstream cryptocurrencies are supported by tangible technology and market demand. Investing in meme coins involves significantly higher risk than in mainstream coins—careful evaluation is critical.
Why do meme coins experience extreme price spikes and crashes?
Meme coin prices are driven primarily by community enthusiasm and online buzz rather than real-world utility or technical fundamentals. When a meme goes viral or a celebrity posts about it, new retail investors rush in causing sharp price spikes; when interest wanes, mass sell-offs trigger steep crashes. This resembles a game of “musical chairs”—those left holding the bag often incur significant losses. Understand the risks fully before participating.
Are meme coins suitable for average investors?
Average investors must have a very high risk tolerance to invest in meme coins. These assets lack fundamental value drivers and move solely on market sentiment—99% of meme coins ultimately go to zero. Unless you deeply understand the specific community culture involved, have discretionary funds you can afford to lose entirely, and can handle total loss risk, large-scale participation is not advised. Start with small experiments on reputable platforms like Gate; build technical analysis skills before making bigger commitments.
Where can you buy meme coins?
Major meme coins (such as DOGE and SHIB) are listed on large exchanges like Gate or Binance. Most emerging meme coins only trade on DEXs (decentralized exchanges) or smaller platforms. Buying from established exchanges like Gate is generally safer with more manageable risks; purchasing from obscure platforms increases your exposure to smart contract scams or liquidity issues—exercise caution.
How can you identify scam meme coins?
Common red flags include unlimited or excessively large token supplies, anonymous teams with no verifiable track record, communities reliant solely on exaggerated marketing without substance, or trading pairs with poor liquidity that can easily be manipulated. Evaluate contract code transparency, team background, community engagement levels, etc., before buying. Always verify tokens on reputable platforms like Gate—avoid unfamiliar links or unofficial wallet downloads.
References & Further Reading
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